SOURCES European Commission cautious about Government’s decision to return to a regulated energy market: How much will be returned remains to be seen and we are analyzing it

The European Commission is analyzing the decision of the Ciucă Government to return to a regulated energy market, sources within the Commission told G4Media.ro, saying that regulated prices have been accepted during this period, but expressed some reservations about this decision.

„It depends to what extent and how strict the regulation is, not to generate distortions in the market and not to damage the conditions of storage and solidarity. There are only about six bilateral agreements. How much will return to the regulated market remains to be seen and we are lookinginto into it. If there is a regulated market where you don’t sell below cost, that’s one thing, but if you ask for subsidies, that’s something else,” the sources said.

According to European officials consulted by G4Media.ro, the Commission is expected to decide in a few months whether or not the government’s decision complies with European law.

As for the energy reserves reported by Romania, European officials said that there is no major risk for Romania either on gas or electricity. „There don’t appear to be major problems, that’s why we need to be careful about this, strengthening interconnections,” the Brussels officials added.

As for the aid given to Moldova, this is considered „sufficient” in Brussels.

„There are about 450 megawatts for Moldova, the aid is sufficient. The Commission appreciated the aid given to Moldova and the fact that a derogation was given to export energy to the Republic of Moldova,” the sources said.

Background

Government Secretary General Marian Neacșu and Energy Minister Virgil Popescu announced at a press briefing on Friday that the government has decided, by emergency ordinance, to return to the regulated electricity market. The information was first published by G4Media on Wednesday, after the meeting of the governing coalition.

The energy market will be regulated until March 2025, Virgil Popescu said. The deadline coincides with the end of the 2024 election year, when presidential, parliamentary, local and European elections will be held.

The emergency ordinance stipulates that the maximum price at which energy producers will be able to sell electricity is 450 lei/MWh, according to Virgil Popescu. The Energy Minister also said that „it is a price that ensures the development of investments by companies, the development of new capacities. Only capacities put into operation before the adoption of Ordinance 27 will participate”.

„The mechanism regulates part of the energy market. It makes it possible to support the price offsets in GEO 119. We have been pioneers in Europe in adopting a number of measures that have subsequently been adopted by other countries”, Marian Neacșu also said.

This is the second attempt by the government to regulate a market, after firewood. Regulating a maximum selling price for firewood has led to a shortage of wood, as most producers have refused to sell at a price deemed too low.

So far, representatives of the power generation sector have not had a public position on returning to the regulated market. Romania has gradually moved away from regulating the energy market as a result of integration into the EU single market.

„It’s an ingenious system, a similar system is applied in France, only there we are only talking about nuclear energy,” Minister Virgil Popescu said on Friday. „By 2023 we estimate that one-third of the energy market will be in this system. This system will allow price stability throughout the duration of this mechanism,” he added.

Correspondence from Brussels

Translated article